This Freeman Law blog provides insight for the Texas nonprofit corporation to understand its obligations relating to the maintenance of books and records and as to when, and under what circumstances, those books and records may be required to be made available for inspection.
In the near 15 years of representing nonprofit corporations, this writer has been involved in numerous scenarios involving records requests by the curious public, the media, officers, directors, management, and even members of nonprofit corporations, including churches, secular public charities, trade associations, and quasi-governmental entities.
Usually, the scope, timing, nature, and purpose of the request is worked out informally-and without litigation-between the organization and the individual requesting the records, but in almost all situations, the nonprofit corporation client does not generally know or appreciate the legal requirements for making certain records available for inspection or copying to the particular requesting party.
With thoughtful and creative drafting of governing documents, such as bylaws and internal policies tailored specifically for records inspection (and protection of the nonprofit corporation), a Texas nonprofit corporation can prepare itself for the inevitable public or internal request for inspection of records of the nonprofit corporation.
Note: This blog does not address records of a Texas nonprofit corporation that may be subject to inspection under the Texas Public Information Act, being another area of law addressed by this writer with respect to governmental entities, quasi-governmental entities, and private entities who do work for governmental entities. See Tex. Gov't Code, Ch. 552.
Chapter 22 of the Texas Business Organizations Code.
Texas nonprofit corporations are governed by Chapter 22 of the Texas Business Organizations Code ("Chapter 22"). Subchapter H of Chapter 22 contains statutory requirements and provisions for records. For example, if a Texas nonprofit corporation has members, a member, on written demand stating the purpose of the demand, to examine and copy at the member's expense, at any reasonable time and for a proper purpose, "the books and records of the corporation relevant to that purpose." See Tex. Bus. Org. Code ' 22.351.
A "member," in this context, means a person who has membership rights in the nonprofit corporation under its governing documents. See id. at ' 1.001(53)(B). "Governing documents" means the certificate of formation of the nonprofit corporation, or the other documents or agreements adopted by the nonprofit corporation to govern...
